What's causing Americans to drop home insurance coverage? (2024)

FAQs

What's causing Americans to drop home insurance coverage? ›

More Americans are declining to buy home insurance due to increasingly expensive premiums — leaving them at considerable risk of losing their home and personal belongings in case of a disaster.

Homeowners insurance policies can be canceled or nonrenewed for lapses in payment, changes in underwriting criteria, the condition of the home or property and more.

California, Florida and other wildfire states are rapidly becoming uninsurable | Fortune.

Homeowners are increasingly forgoing home insurance, gambling that the likelihood of a disaster isn't high enough to justify the cost of a policy. Some skipping insurance say they are doing so because they can no longer afford the rising premiums.

Losses have been spreading beyond states that have been ravaged by hurricanes and wildfires, like Florida and California, and into places like Iowa, Arkansas, Ohio, Utah and Washington. Even in the Northeast, where homeowners insurance was still generally profitable last year, trends are worsening.

The Illinois-based company, California's largest insurer, cited soaring costs, the increasing risk of catastrophes like wildfires and outdated regulations as reasons it won't renew the policies on 30,000 houses and 42,000 apartments, the Bay Area News Group reported Thursday.

It can be difficult to find homeowners insurance on the standard market if you've been dropped, since many insurers view you as being at greater risk of filing a claim. However, there are specialty insurance companies willing to work with high-risk homeowners, including Foremost, Stillwater, and Travelers.

To wit, five states have uninsured rates of 10.0% or greater, with Mississippi leading the charge at 15.9%. Runners-up include Texas, Georgia, Tennessee and Kansas, all of which, along with Mississippi, are states without expanded Medicaid, Sangameshwar notes.

Texas remains the state with the most uninsured Americans, but recent estimates from the U.S. Census Bureau reveals that last year's percentage of Texans without health coverage, 16.6%, was at one of the lowest points in a decade.

Now, insurance providers are dropping out of some markets like Florida and California altogether, where the perceived liability is too high to operate profitably.

Is it smart not to have homeowners insurance? ›

Homeowners insurance will offer ongoing financial protection

Will all the money and care you've invested in your home—and life—it's advisable to guard against financial risk and always keep a homeowners policy in force.

Therefore, the wealthy may have to purchase larger amounts of insurance because they may be liable for payments commensurate with the value of their total wealth, and not necessarily limited to the value of the property insured. In other words, the distribution of potential losses depends on wealth.

That's one in 13, or 7.4%—and that percentage is even higher for Black, Hispanic and Native American homeowners, those who earn less than $50,000 a year, people who inherited their houses and owners of manufactured homes.

State Farm offers the cheapest homeowners insurance at $174 per month on average, according to a comprehensive review by the MarketWatch Guides team. According to data obtained from Quadrant Information Services, the average cost of a homeowners insurance policy is $2,511 annually or $209 per month.

1. Hawaii. Hawaii is relatively safe from the impacts of many natural calamities common in the US mainland, including tornadoes, hailstorms, and blizzards. This makes home insurance in the state the cheapest in the nation.

How much will home insurance rates increase? The firm's Home Insurance Projection Report foresees a 6% rise in annual premiums in 2024. The increase will put the national average at $2,522 at the end of the year.

Key Takeaways. Failing to maintain homeowners insurance can breach your mortgage terms, resulting in penalties, mortgage recall and potential financial challenges. Without coverage, lenders may impose lender- or force-placed insurance, which is a costly alternative to standard home insurance policies.

Neglecting home maintenance

If you don't carry out essential repairs and maintenance on your home, you may void your insurance policy. For example, if you don't replace missing roof shingles and get water damage on your ceilings, it may not be covered.

There is no set number of claims that will result in an insurance company dropping you from a home insurance policy. The decision to drop a policyholder is typically based on the frequency and severity of claims, the type of claims filed and the overall risk profile of the policyholder.

A different insurer may offer you better rates for your coverage needs. Is it bad to switch homeowners insurance? No, in fact it's a good idea to compare homeowners insurance quotes annually to make sure you aren't missing out on a better deal elsewhere.